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The above advice is excellent. The more books you read on that subject, the better off you will be. I also suggest you hire a property manager to deal with the rental process and the tenant. Good luck.

I now have 2 single family rentals that originally were my primary residence. I used to have another one, that I managed myself and that was a nightmare at times until I sold it. I didn't have much information on the subject but have been relying on the property managers for most of the heavy work. From my personnal experience a property manager is the way to go for single families but not sure about multi family homes.

I've not found a really good book yet...most of them simply state common sense.

I have two rentals, and am relatively new to this. My best advice is to join a local landlord association. We have one in our small town, and it's the smartest thing I've done. They get us 1/2 price lawyer fees to look at leases, discount coupons at Lowes, we have monthly technical seminars where we do different things (last month the local eviction judge spoke to us about what we can and cannot do legally), they give us free access to a local court records database, and they provide a binder with sample documents such as applications, lead-based paint disclosures, flood disclosures, proof of mailing forms from the USPS, and the list goes on and on.

I manage my own properties. I've learned a TON in the first 18 months I've been doing this. I do nearly all my own repairs also, except where I'm not legally permitted (In Indiana, you must hire licensed contractors for certain types of work).

I've also found there are widely different views from landlords, and I disagree with some of them. Many of them focus on reducing expenditures by buying the cheapest of everything and cutting corners. I see that as penny-wise and pound-foolish. They get many calls for things that break...IMO due to this. My philosophy is to fix it right the first time. I've had one call in 18 months on two properties...and I had the faucet fixed in 30 minutes.

Spend more up front, avoid the headaches later. However, I spend on items the tenant cannot easily break...such as plumbing, electrical upgrades, ceramic tile kitchen rather than vinyl (which tears easily), good guttering systems to direct water away from the house (or you'll have foundation and water problems that cost much more), and so on.

Where I do NOT spend much money is on looks and style. I buy inexpensive light fixtures, use pine for all wood trim and don't miter the joints (butt join them), no fancy faucets, but not the cheapest in the store either, I like Delta usually, breaker boxes (if you have a fuse box, some tenants will use a nickel to fix a blown fuse rather than spend $5 on a fuse...and thus cause a fire), basic landscaping, etc.

I'm sure you'll learn a lot by reading, and feel free to post specific questions. Many of the best tips are the little ones....I'll give an example below.

My first rental was on a VERY busy street in town. I put the "for rent" sign out at 1 pm on a Saturday, went home at 4 pm, and already had 50 phone calls that wanted me to return their call. I invested a TON of time calling them all back...and about 80% of them lost interest immediately upon hearing it was a 2 BR or that the rent was $700/month...too high for them. Over the next week, I handled HUNDREDS of such calls.

Fast forward a year later when I rented it again. This time I put on my voicemail some specifics about the house, such as rent, # BR and # bath, whether pets were allowed, deposit amount, appliances furnished, and so on. This time I had 1/10th of the number of voicemails...people heard what they didn't like, and hung up. This saved me a TON of time.

Good luck!

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"Live every day as if it were your last, and one day you'll be right" - unknown

"Fast forward a year later when I rented it again. This time I put on my voicemail some specifics about the house, such as rent, # BR and # bath, whether pets were allowed, deposit amount, appliances furnished, and so on. This time I had 1/10th of the number of voicemails...people heard what they didn't like, and hung up. This saved me a TON of time."

You might try craigslist side by side with the sign next time you have a vacancy. I now use it exclusively, and have begun to regard signs as tire-kicker magnets.

"Fast forward a year later when I rented it again. This time I put on my voicemail some specifics about the house, such as rent, # BR and # bath, whether pets were allowed, deposit amount, appliances furnished, and so on. This time I had 1/10th of the number of voicemails...people heard what they didn't like, and hung up. This saved me a TON of time."

You might try craigslist side by side with the sign next time you have a vacancy. I now use it exclusively, and have begun to regard signs as tire-kicker magnets.

Thanks for the suggestion, I may try that.

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"Live every day as if it were your last, and one day you'll be right" - unknown

Experiance will be the best teacher ... make sure your mortgage can be paid on 1/2 the rent and you should be fine.

FWIW I closed on a Fannie Mae property yesterday .... Was leveraged 213k at the peak. Fannie forclosed the first position ... 123k. I paid 42k. Needs work .... but , heck, the land ALONE is worth 50k (town assessed the land at 60k).

Experiance will be the best teacher ... make sure your mortgage can be paid on 1/2 the rent and you should be fine.

FWIW I closed on a Fannie Mae property yesterday .... Was leveraged 213k at the peak. Fannie forclosed the first position ... 123k. I paid 42k. Needs work .... but , heck, the land ALONE is worth 50k (town assessed the land at 60k).

Hello all, can anyone recommend websites, books, or other references on buying and renting properties?

Here's two classics that will take you by the hand and guide you through the thought process as well as the mechanics:
(1) Investing in Real Estate, 4th edition or later, by Andrew McLean & Gary W. Eldred (who's taken over the new editions) and
(2) Landlording by Leigh Robinson (7th edition or later).

The main advantage of these two is that they should be available through a local public library. They've been out for a while.

You should query Arebelspy on his resources. He does this for a living.

Don't buy any of his stuff until you've read all of his blog and thoroughly understand his analysis. Use his math to make your decisions. He makes Benjamin Graham look like a wild-eyed day-trader.

There are several military-oriented websites devoted to rental real estate. Instead of using Craigslist, if you're near a military base then you can use AHRN.com. (Any landlord can list a property here, but only military can browse the inventory.) There are also other military-friendly startups with similar websites. Again, if you're near a military base then ask their housing office what they use.

The only advantage of a military tenant is that they're unlikely to get laid off. Otherwise they share most of the characteristics of the rest of the tenant bell curve.

Landlording may be straightforward. It might even be profitable. However it is not easy. Instead of saying "I may try to buy one and rent it", try rephrasing it as "I think I want a part-time job for less than minimum wage". Most of the time you'll do fine and won't have any issues. But for at least a couple of weeks every year you'll be working your assets off (in addition to your day job, your family, and any other concurrent crises) to clean up after a negligent tenant, to get rent from a delinquent tenant, or to get a new tenant. You do not get to choose the timing of those two weeks.

Anecdotally, I have yet to find a landlord with an exit strategy other than "probate". In other words they may claim to buy a bargain, but they tend to hold it for the cash flow and never sell it for the capital appreciation. If that's your investment strategy then I'd recommend a good large-cap dividend-paying stock portfolio. No leaky toilets or dirty carpets to worry about there.

__________________*
*The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.

Anecdotally, I have yet to find a landlord with an exit strategy other than "probate". In other words they may claim to buy a bargain, but they tend to hold it for the cash flow and never sell it for the capital appreciation. If that's your investment strategy then I'd recommend a good large-cap dividend-paying stock portfolio. No leaky toilets or dirty carpets to worry about there.

While I'm not sure about the alternative I strongly agree with Nords that you need an exit strategy. I've been a part time investor for about 30 years, with 3 different rentals at different times. One lost $$ one doubled in about 15 years, and I have one I purchased about 4 years ago that is active. I pay for the mortgage with rent and have to pay in repairs and a 50% rental fee when changing tennants. So, it is fun to watch someone else mostly buy me a house, but exit is sticky. When you sell, you have a 25% tax on any depreciation along with the cap gains tax.

As has been said many times here, being a landlord/owner as not for everyone. I started around 1981, and it was the right decision for me. I still have both single family houses and apartments. As was mentioned a few times already, it's a cash flow machine. This is particularly important when markets drop or interest rates sink. Another nice advantage is taxes. Depreciation against earnings helps with current cash flow, but selling the property becomes a problem. You can avoid this in the building up phase of your property expansion using what is called a tax free exchange. Sooner or later the IRS gets their due unless you die first so that the tax basis resets for your heirs.

As for active management of the property, that is a personal, and personality, decision. I usually don't mind doing it, although, as Nords already mentioned, half the time it's at an inconvenient time. I enjoy meeting with tenants, and 95% of them are very reasonable about dealing with issues.

The biggest issue is still buying in the right location at the right price. Everything else is management. Oh, and that includes doing small repairs yourself and having good professionals available when needed. Twenty years ago I even did the big stuff myself. That's becoming more difficult for me today, both physically and emotionally. I still recommend rental property if you have the drive and the energy.

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Can't you see yourself in the nursing home saying, " Darn! Wish I'd spent more time at the office instead of wasting time with family and friends."

Investing in Real Estate is a good book recommendation, and I second the comments about landlord associations.

We got very serious about buying rental property a couple years ago, read the books, joined the associations, talked to lawyers, and got an agent. After six months of looking we decided not to do it. Why? It became clear that it was going to be a lot of work. Are you the kind of person who wants to spend your weekends selecting and installing light fixtures? How about screening tenants? Yes, you can outsource those things, but then it is expensive and eats into your margins.

When you buy rental property you are buying a job, and you are buying into some risks. I think it can pay off handsomely for the right situation and personality, but we decided that we were not cut out for it. So consider your personality, interests, and time availability carefully.

Real estate is still high here in New England. I am looking at the math side of it, and I don't see how rents can support the mortgage, let alone 1/2 the rent paying the mortgage.

I found a 2 family, 2 bedroom each house for $150K. Probably will need some work, not sure how much. don't think rent would be above 700 or 800 per side, so unsure how the math can work out.

Good discussion here. I agree with much of what Nords said, except about the cash flow buying a dividend stock instead. My return on rentals is much better than any dividend I can get, and it allows me to diversify away from an already stock-laden portfolio.

As to the post above, many landlords buy their property on OPM (other people's money), and believe that the best way is through nearly eternal mortgages, so their monthly payments are very low....sometimes interest only. I don't agree with this, but to each his own.

The houses I buy are in the $50-$70k range, and then I add about $10-15k plus a lot of sweat equity...and my rents are in the $700-$800/month range. I'm sure each part of the country is different.

__________________
"Live every day as if it were your last, and one day you'll be right" - unknown

The biggest issue is still buying in the right location at the right price.

Dave Ramsey says that the only time you should buy a rental is if you can steal it. In other words, he recommends offering about 1/2 of market value, and then perhaps negotiating up. He readily admits you'll get a lot of rejections, but the 10% you do buy from a very motivated seller allow you to be profitable.

I must admit I've not been that good at negotiating...both of mine I've bought for about 60-65% of asking price, which in one case (I didn't get an appraisal on the other one I own) was about 66% of appraised value. He's right about motivated sellers...mine was from an elderly mother who was moving into assisted living...she was mentally impaired so I was dealing with her children...who had POA. They wanted this thing to "go away" and were willing to deal.

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"Live every day as if it were your last, and one day you'll be right" - unknown

It became clear that it was going to be a lot of work. Are you the kind of person who wants to spend your weekends selecting and installing light fixtures? How about screening tenants? Yes, you can outsource those things, but then it is expensive and eats into your margins.

SIS

This is very accurate in my experience. I knew it would be a lot of work going in...as I spoke to my dad and other friends who did it...and I did not underplay what they told me.

IMO the heavy part of the work is in the initial business formation phase. I opened an LLC, and the number of hours was enormous. Filing for an LLC was $400 and hours reading about the various legal structure options. Then I had to write Articles of Incorporation and file them with the state. I wrote a mission statement for the company, and bylaws. I had to create a filing system at home...the business doubled my paperwork. I got business cards, which I spent hours designing. I studied my options on phone lines (ended up getting "distinctive ring"). I opened a mailbox (not a PO box, they have disadvantages) at a UPS center. I opened a business banking account, filed for an EIN number with the IRS, ordered checks for the business, and obtained business credit cards. Every one of these things took a few hours of research to make the right choice. I attended landlord association meetings, read a few books, paid for lunches with friends who had rentals. I studied property tax statements to learn how to read them, spent time at the local assessors office to understand how property taxes were affected by landlording. The list goes on and on.

Many people don't do it formally as I have...but I was educated as an Engineer...what do you expect.

I set up the LLC 5 years ago...but there was zero activity until about 18 months ago. We now have two houses. My eventual goal is somewhere between 4 and 6 single family residences. At that time, I'll rehire...leaving my FT MegaCorp job, and do the rental thing hopefully about 20 hours/week. If it's more than 20, I'll sell a property to get to 20. The money is less important than the time at that point.

I should also point out that for me, the other heavy work load is rehabbing. My buying strategy is to get places where the work requiring experts is minimal (good foundations, good roof, good plumbing, etc.), but where they need a ton of TLC that I can do myself. I like to see floors that need tiled, cabinets that need sanded/refinished, trim work that needs replaced, drywall holes, rusty HVAC vents I can sand and repaint, doors that stick, where I can remove them, sand the edge, and restain, simple wiring such as adding an outlet or replacing a light fixture, adding closet shelving, etc. That's the fun stuff, and I can do it all.

When I buy one, I take 5 sets of work clothes over there. After my 8-5 job, I get in my car and drive to the rental, picking up a sandwich on the way. I change into work clothes, and work until 10-11 pm...every day. On weekends I'll do 10-12 hour days. I hire help from local teens for busy work. The first property took me 9 weeks to rehab this way. The second property was more involved...took me 13 weeks. But when my tenants move out, the work should be significantly less...as much of what I did is now hidden and cannot be easily damaged. I've not had a tenant move out yet...and I know there can be horror stories. However, I'm thinking a few cabinet repairs, some drywall holes to fix, a broken faucet or light fixture, some caulking, and a full paint job.

The "big" jobs are done, on both houses. Fully updated electrical, fully updated plumbing, ceramic tile and hardwood floors in most areas, inexpensive wood trim I can make myself in my woodshop, new roofs, solid foundations, cabinets and doors that are "tight" and solid, and furnaces both less than 4 years old. New subfloor in both bathrooms, no rotted floor joists, etc.

Yes, over time, even furnaces and roofs will need replaced. I am saving for those things now. It helps that I paid cash for the first house, as all the rent from year 1 allowed me to pay for rehabbing on unit #2. We are paying the loan on unit #2 off in 5 years or less....we can do this because of both my MegaCorp job as well as the fact that DW works FT and makes a good living.

I'm sure surprises will come up, and I'll have some setbacks. Nothing different than life in general...plan the best you can, and deal with the problems as they arise. So far, so good.

__________________
"Live every day as if it were your last, and one day you'll be right" - unknown

If it's more than 20, I'll sell a property to get to 20. The money is less important than the time at that point.

Of course, the other option if it is too much time is to hire a property manager. My experience with them has been mostly good, and it allows you to spend your time doing what you want and not another job. It also allows you to get more property without spending lots more time. My first property I did like you, all my own management, repairs, taxes and accounting. However, once I had done that and learned some lessons in tennant selection and care, and the tax/accounting, it became time to get someone to do that for me.

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